Ch. 4 Detecting Risk Flashcards
Critical success factor
An element, necessary for an org’s success, that is derived from a strategic objective
Risk Tolerance
Amount of uncertainty an org is prepared to accept
KPIs measure activity tied to ___
CSF (critical success factor)
Key performance indicator
Measures progress toward an organizational goal
Risk tolerance measures how much deviation from the ___ an org is willing to accept
KPI
Key Risk Indicators
A tool used by an organization to measure the uncertainty of meeting a strategic business objective
Difference between KPIs and KRIs
KPIs measure progress toward a goal; KRIs measure risk and volatility that affects the achievement of goals
True or false: KRIs are only internal
False; can be external
Organizations should develop____ KRIs
A. Many or B. Limited
Limited - focus on those with the greatest impact to the organization
Economic capital
Amount of capital required by an org to ensure solvency at a given probability level, based on fair value of its assets minus the fair value of its liabilities
Business Process Management (BPM)
System to analyze, model, measure, and optimize business processes
5 BPM steps:
- Design/redesign processes
- Model scenarios
- Execute process changes
- Monitor results
- Optimize processes
3 Goals of BPM:
- Improve __
- Manage ___
- Increase ___
Efficiency; risks; profitability
Trigger levels can indicate when __ __ must be taken
corrective action
What role does ERM play in BPM?
Helping to identify risks to processes before they occur
